Page:Henry Osborn Taylor, A Treatise on the Law of Private Corporations (5th ed, 1905).djvu/712

 § 699.] THE LAW OF PRIVATE CORPORATIONS. [CHAP. XII. opinion and could not have been found out by the shareholder. The fact known to the defendant and not to the plaintiff, was that the former was about to consummate a sale of the road which was likely to enhance, and when effected did greatly en- hance, the value of the stock. 1 § 699. If directors expend money, and incur personal liability for purposes not within their authority, yet the share- holders, knowing the circumstances, acquiesce, and receive the benefit of their acts, the directors will, as against the shareholders, be entitled to indemnity from the corporate funds. 2 And if shareholders neglect to at- tend corporate meetings where they know such matters are to be discussed, they will not be permitted to take advantage of their ignorance. 3 But where by reason of certain defaults the officers of a corporation have been compelled to pay its debts, they cannot obtain contributions from the shareholders, whom the same statute rendered liable after the property of the offi- cers had been exhausted. 4 Directors' right to in- demnifica- tion. 1 Commissioners of Tippecanoe Co. v. Reynolds, 44 Ind. 509, Downey, C. J., dissenting. The transaction which in this case was allowed to stand seems to the writer to have been eminently unfair, and indeed a rule — for which this decision is cer- tainly authority — that directors in their dealings with shareholders are entitled to take advantage of their knowledge of facts not known to the latter, but which the directors are acquainted with by reason of their 692 official position, seems of question- able propriety. Compare Perry v. Pearson, 135 111. 218, 236; Sargent v. Kansas Mid. R. R. Co., 48 Kan. 672. 2 Ex parte Chippendale, 4 De G. M. & G. 19; § 645. 3 See Turquand v. Marshall, L. R. 4 Ch. 376; Lire British, etc., Assur. Soc, Lane's Case, 1 De G. J. & S. 504. 4 Stone v. Fenno, 6 Allen, 579.